Accounting Terminology Guide

E

E
Earned Income

Wages, salaries, professional fees, and other amounts received as compensation for services rendered.

Earned Income Tax Credit (EITC)

A refundable tax credit for eligible low income workers, subject to computations based on qualifying children and phase in and phase out income levels.

Earnings Per Share (EPS)

Measure of performance calculated by dividing the net earnings of a company by the average number of shares outstanding during a period.

Earnings Price Ratio

Relationship of EARNINGS PER SHARE (EPS) to current stock price.

Econometrics

Use of computer analysis and modeling techniques to describe in mathematical terms the relationship between key economic forces such as labor, capital, interest rates, and government policies, the test the effects of changes in economic scenarios.

Economic Growth Rate

Rate of change in the gross national product, as expressed in an annual percentage.

Economics

The study of the ways goods and services are produced, transported, sold, and used.

Effective Interest Method

A way of AMORTIZING BOND DISCOUNTS or PREMIUMS by applying a constant interest rate to the CARRYING VALUE of the BONDS at the beginning of each interest period.

Effective Interest Rate

The rate of INTEREST actually paid or earned.

Effective Tax Rate

Total income taxes expressed as a percentage of NET INCOME before taxes.

EITC

A refundable tax credit for eligible low income workers, subject to computations based on qualifying children and phase in and phase out income levels.

EITF

Assists the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides guidance on early identification of emerging issues affecting financial reporting and problems in implementing authoritative pronouncements.

Emerging Issues Task Force (EITF)

Assists the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides guidance on early identification of emerging issues affecting financial reporting and problems in implementing authoritative pronouncements.

Employee Benefit Plan

Compensation arrangement, generally in writing, used by employers in addition to salary or wages. Some plans such as group term life insurance, medical insurance and qualified retirement plans are treated favorably under the tax law. Most common qualified retirement plans are: (1) defined benefit plans - a promise to pay participants specified benefits that are determinable and based on such factors as age, years of service, and compensation; or (2) defined contribution plans - provide an individual account for each participant and benefits based on items such as amounts contributed to the account by the employer and employee and investment experience. This type includes PROFIT-SHARING PLANS, EMPLOYEE STOCK OWNERSHIP PLANS and 401(k) PLANS.

Employee Stock Ownership Plan (ESOP)

Stock bonus plan of an employer that acquires SECURITIES issued by the plan sponsor.